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STEWART HONEYBEE PRODUCTS v. COMMONWEALTH PENNSYLVANIA (08/08/88)

decided: August 8, 1988.

STEWART HONEYBEE PRODUCTS, INC., PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, RESPONDENT



Appeals from the Orders of the Board of Finance and Revenue in the case of In Re: Stewart Honeybee Products, Inc., No. R-6820 and C-11,043.

COUNSEL

Lloyd R. Persun, Shearer, Mette, Evans & Woodside, for petitioner.

Michael A. Roman, Deputy Attorney General, with him, LeRoy S. Zimmerman, Attorney General, for respondent.

Judges Colins and Palladino, and Senior Judge Barbieri, sitting as a panel of three. Opinion by Judge Palladino.

Author: Palladino

[ 118 Pa. Commw. Page 431]

In this consolidated appeal, Stewart Honeybee Products, Inc. (Petitioner) appeals from an order and a resettlement of the Board of Finance and Revenue

[ 118 Pa. Commw. Page 432]

    which determined that Petitioner was not entitled to the manufacturing exemption from capital stock tax for the tax years ending June 30, 1980 and June 30, 1981, respectively. For the reasons set forth below, we affirm.

Petitioner is a Pennsylvania corporation engaged in the business of producing honey for human consumption. Petitioner obtains raw honey from its beehives and purchases raw honey from other beekeepers. When the raw honey arrives at Petitioner's plant, it is a crystalized solid and contains impurities or "foreign matter."*fn1 The raw honey does not meet Food and Drug Administration (FDA) or United States Department of Agriculture standards for human consumption.

At Petitioner's plant, the honey is tested to determine its color, flavor and moisture content. The honey is then partially liquified using steam unit heaters and drained into a stainless steel batch tank. The honey is then pumped into a mixing tank equipped with electric mixing paddles where it is blended. The blended honey is pasteurized by heating it in a steel plate heat exchanger. The pasteurized honey is then filtered through a series of filters. The filtered honey is pumped through a cooling exchanger. Finally, it is packaged by automatic packaging lines. The end result is honey which meets federal standards for human consumption.

The sole issue presented in this case is whether the production of honey meeting federal standards for human consumption from raw honey constitutes manufacturing for purposes of the manufacturing exemption from capital stock tax contained in section 602(a) of the Tax Reform Code of 1971, Act of March 4, 1971, P.L. 6,

[ 118 Pa. Commw. Page 433]

    is basically a very simple process. Petitioner simply takes raw honey, ...


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